In her latest Housing Watch note, Bank of America economist Michelle Meyer reiterates her own bearish 2012 call on the housing market.

"[W]e believe those who are counting on the housing sector to save the economy this year will be disappointed," wrote Meyer in a January 27 note.

She does, however, acknowledge new government efforts to bolster the housing market, and believes they are positive developments. From her note to clients today:

The new year arrived with a number of new policies to support the housing market. The Obama Administration expanded the modification program - Home Affordable Modification Program (HAMP) - until the end of 2013 and increased incentives for principal reduction. It also proposed a new plan for streamlined refinancing for non-agency mortgages. While the expansion of HAMP could help to modestly support modification efforts, the refinancing proposal is highly unlikely to be implemented. It requires Congressional approval for additional funding and cooperation from the FHFA, both of which are difficult. Even more important than HAMP and HARP have been the steps taken to implement an REO-to-rental program. We believe a plan could be announced before the end of this quarter; although it will take time to implement and may be done in small pilot programs initially, it will be a step in the right direction.

While policymakers continue to think of ways to provide support, the housing market has continued along its gradual, and painful, healing process. The construction market sees signs of life, particularly in multifamily building and renovations, and home prices continue to adjust with greater price discovery in several markets.

Nevertheless, she thinks home prices will continue to head lower. Meyer writes, "Housing construction should increase this year, but home prices are likely to fall further."